What is a Statement of affairs


The Statement of Affair is a summary of a Comapny’s assets and liabilities. It states the net book value and amount expected to realise at the date of Insolvency of the business. Accompanying the balance sheet is a list of creditors and shareholders.

The format of the SOA is different to a traditional balance sheet and certain calculations and considerations will be required.


What is the SOA for?

The SOA provides a useful source of information for both the Administrator and the creditors. Its analysis can be used to establish:

  • The likely return to creditors
  • The extent of the insolvency
  • Whether the directors have concealed assets from the administrator
  • Whether there are indications of wrongful trading
  • Once the administration is complete the actual performance of the administrator.

It is a very important document in the insolvency and is lodged at CRO so that the public have full visibility as to the position of the company at insolvency. It is often referred to by lenders should directors get involved in new ventures before lending to the new company to understand how serious the previous insolvency was. The SOA may also be considered when determining whether a director should be disqualified.

How to complete a Statement of Affairs

Many directors complete the Statement of Affairs not realising that they can normally get it prepared professionally for no cost to them – the cost is met by the Administrators under the Insolvency Act 1986. 

Whilst the concept of the SOA is simple, the calculations and presentation is more complex and changes along with case law. Consideration must be given to:

Which secured creditors have priority

The recoverability of inter-company balances (which may be complex if a whole group enters Administration

Any cross company guarantees and the potential liability that may crystalise as a result

Employee claims for notice, redundancy, holiday pay, arrears, etc. and the amount split between preferential and non-preferential.

The impact of any potential Reservation of Title claims

The potential liability of claims that have not crystalised such as landlord claims

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